Taxes for Foreign Scholarship Stipend/Fellowship

Aliens Studying Overseas

Resident for Tax Alien Studying Overseas

This person has been in the US long enough under a visa status that allowed this person to become a Resident Alien for Tax Purposes (RA). As a RA, this person is not exempt from taxes because s/he is studying outside of the US. RAs are taxed on their worldwide income.

Required to complete UPP-192 and W9 Form and attach any available documents.

Letter from the department is required stating dates of study, country of study, etc.

This income is taxable and reportable in the US – a letter summarizing the stipend payments will be send by January 31.

The RA will be treated as a RA until December 31 of the year s/he left the US. Beginning January 1 of the subsequent year, if this person will remain outside of the US, s/he will be treated as a NRA.

Nonresident for Tax Alien Studying Overseas

This person has never been to the US (other than tourist or short business activities) or has been in the US for a short enough period to be considered a Nonresident Alien for Tax Purposes (NRA).

If this person has never been to the US, only a W-8BEN Form and letter is required.

A letter from the department is required explaining what activities are being performed, dates of activities, location, and citizenship of employee.

There is no requirement for tax withholding on these payments

Post Doctoral Fellowships

Must complete same paperwork and attach the appropriate documents as regular stipend recipients including UPP-192 and W-8BEN Form (or W9 Form for residents for tax).

Do not submit W-4 and IL-W-4 forms. This is not employment.

If the Post-Doctoral Fellow is a resident for tax, no taxes will be withheld at source. If the Post-Doctoral Fellow is a nonresident for tax, 14% in federal tax withholding is required. No state taxes will be withheld, although this payment is required to be reported to the Illinois state government.